At the World Environment Day event on June 5, 2021, Prime Minister Narendra Modi announced the government’s decision to meet the target of 20 per cent ethanol blending in petrol by 2025, five years before the original target. The announcement was in line with the theme of the event, “Promotion of Biofuels for a Better Environment”. The programme was organised jointly by the Ministry of Petroleum and Natural Gas (MoPNG) and the Ministry of Environment, Forest and Climate Change (MoEFCC). The prime minister also released the “Report of the Expert Committee on Road Map for Ethanol Blending in India 2020-2025”, and launched the ambitious E-100 pilot project in Pune for the production and distribution of ethanol across the country.
In his address, he mentioned that till 2014, on an average, only 1.5 per cent of ethanol could be blended in India, which has now reached about 8.5 per cent. Also, in 2013-14, about 380 million litres of ethanol was purchased in the country and this has now grown almost eightfold to more than 3,200 million litres. The increase in ethanol procurement has largely benefited sugarcane farmers. In 2020, oil marketing companies (OMCs) bought ethanol worth about Rs 210 billion. This not only allowed farmers to earn extra income but also helped in mitigating the challenges associated with overproduction of sugar. Often due to overproduction, prices of sugar crash and storage issues emerge. Mitigating all such challenges will benefit sugarcane farmers directly.
Furthermore, the government is focusing on building the necessary infrastructure for the production and purchase of ethanol in the country. Most of the ethanol manufacturing units are concentrated in four or five states where sugar production is high, but now foodgrain-based distilleries are being established to expand this across the country. Modern technology-based plants are also being set up to make ethanol from agricultural waste.
Background and current status of ethanol blending
In India, about 98 per cent of the fuel requirement in the road transportation sector is currently met by fossil fuels and the remaining 2 per cent by biofuels. Also, India imports 85 per cent of its oil requirement, leading to high import bills for a commodity whose price is volatile.
In June 2018, the government notified the National Policy on Biofuels, 2018. Under the policy, an indicative target of 20 per cent blending of ethanol in petrol by 2030 was laid out in the Ethanol Blended Petrol (EBP) programme.
In November 2020, the government directed the MoPNG to institute an expert group to finalise a roadmap to not only achieve year-wise blending targets for the next 10 years but also address the various policy implications of such a plan. It was also proposed that issues such as pricing of ethanol, matching the pace of the automobile industry to manufacture vehicles with ethanol-friendly engines, pricing of such vehicles, and fuel efficiency of different engines be studied. Post this, an inter-ministerial committee was formed and later the target year for achieving 20 per cent ethanol blending in petrol was advanced to 2025 by the Cabinet Committee on Economic Affairs in December 2020.
The inter-ministerial committee noted that a very strong foundation for the EBP programme had been laid with the introduction of the following initiatives:
- The Department of Food and Public Distribution’s (DFPD) interest subvention scheme for molasses and grain-based distilleries.
- The setting of standards for E5 (ethanol blending at 5 per cent), E10 (ethanol blending at 10 per cent) and E20 (ethanol blending at 20 per cent) blends by the Bureau of Indian Standards.
- The Ministry of Road Transport and Highways’ (MoRTH) notification in March 2021 for the adoption of E20 fuel as automotive fuel and the issuing of mass emission standards for the same. In May 2021, the ministry also notified safety standards for ethanol blended fuels on the basis of automotive industry standards. These standards lay down safety requirements for type approval of pure ethanol, flex-fuel and ethanol-gasoline blended vehicles in India.
- BS-VI emission norms applicability for E20 vehicles since April 1, 2020.
Currently, petrol with 10 per cent ethanol blend (E10) is being retailed by various OMCs in India. However, as sufficient quantity of ethanol is not available, only around 50 per cent of petrol sold is E10 blended, while the remaining is unblended petrol. The current level of average
ethanol blending in the country is 5 per cent. Due to several interventions in the supply side of ethanol, the MoPNG aims to achieve 10 per cent ethanol blending levels by April 2022.
The report of the expert committee on the roadmap for ethanol blending broadly focuses on the future course, demand projections, key challenges and suggestions to meet the ethanol blending target. The key points of the report are as follows…
After receiving inputs from relevant ministries and associations, analysing demand-supply projections, challenges in the manufacture of E20 vehicles and infrastructure of OMCs, the inter-ministerial committee suggests a gradual roll-out of E20 ethanol in the country to achieve the target by 2025. In the meantime, the roll-out plan suggests pan-India availability of E10 from April 2022 for use as protection fuel to meet the demands of the existing vehicles till April 2025.
The report estimates an ethanol demand of 10.16 billion litres based on expected growth in vehicle population. Modelling exercise on expected penetration of electric vehicles estimates the ethanol demand for petrol blending in the range of 7.22-9.21 billion litres in 2025. It should be noted that the report has made its recommendations on an optimistic demand for ethanol (10.16 billion litres) to ensure that the objectives of E20 are met by 2025.
According to the report, the current ethanol production capacity in India of 4.26 billion litres derived from molasses-based distilleries and 2.58 billion litres from grain-based distilleries is proposed to be expanded to 7.6 billion litres and 7.4 billion litres, respectively. This would be sufficient to produce 10.16 billion litres of ethanol required for EBP and 3.34 billion litres for other uses. However, this will require 6 million metric tonnes (mt) of sugar and 16.5 million mt of grains per annum in 2025 to be used for producing ethanol.
Key challenges and suggestions
The report suggests that the MoPNG should set the target for 10 per cent ethanol blending of gasoline fuel across the country by April 2022. Moreover, it should initiate phased roll-out of 20 per cent ethanol blending from April 2023 onwards. This will enable action by all stakeholders, namely, OMCs, vehicle manufacturers, service stations, distilleries and entrepreneurs. In addition, the report suggests that the target should be supported by a simpler and quicker regulatory regime, preferably a single-window clearance by states, the MoEFCC, the Petroleum and Explosives Safety Organisation, DFPD, and MoPNG, and the launch of educational campaigns for consumers.
A key issue is that when using E20, there is an estimated loss of 6-7 per cent fuel efficiency for four-wheelers, which are originally designed for E0 and calibrated for E10; 3-4 per cent for two-wheelers designed for E0 and calibrated for E10; and 1-2 per cent for four-wheelers designed for E10 and calibrated for E20. In the report, the Society of Indian Automobile Manufacturers (SIAM) has suggested that with modifications in engines (hardware and tuning), the loss in efficiency due to blended fuel can be reduced. And, to compensate consumers for a drop in efficiency from ethanol blended fuels, tax incentives on E10 and E20 fuel may be considered.
The SIAM has mentioned that once the roadmap for the availability of ethanol blended fuel in the country is issued by the MoPNG, it would move towards the supply of compatible vehicles in line with the roadmap. From April 2023, E20 material compliant and E10 engine tuned vehicles may be rolled out across the country. These vehicles can tolerate 10-20 per cent of ethanol blended gasoline and also give optimal performance with E10 fuel. The SIAM envisages that vehicles with E20 tuned engines can be rolled out across the country from April 2025. These vehicles would run on E20 only and will provide high performance. In addition, in a bid to accelerate the adoption and transition to ethanol blended fuels the report suggests price incentives through tax relief at the retail level on ethanol blended fuel and tax incentives for vehicles compatible with E20. The use of less water consuming foodgrain crops such as maize, and 2G feedstock for the production of ethanol have also been recommended.
All in all, the government’s decision to meet the target of 20 per cent ethanol blending in petrol by 2025 and the release of an extensive roadmap to meet the target is a positive development. If successful, these steps will ensure a reduction in the high fossil fuel import bills, an improvement in farmer incomes and a sustainable transformation of the transportation sector.
By Sarthak Takyar